The Daily, Part 1 of 3, 7-22-17

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Market Summary Video, Plays and Play Videos, and Play Table with play
annotations will issue Wednesday, Weekend.

Monday a Market Summary video, new plays, play table annotations.

Tuesday and Thursday reports will contain the market summary, chart links to
view the index charts, and updated play table.

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links in the reports.

If any market circumstances arise where we see additional plays we want to
prepare for the next session, we will of course issue those plays regardless
of the day of the week.

MARKET SUMMARY

- Oh no, NASDAQ fails to notch a new high. Ha ha, right?
- Economic data continues weaker as the FOMC is set to meet next week. Will
it need to walk back some of the response from Yellen's testimony?
- FTC probing AMZN brings back memories of MSFT antitrust.
- New highs, now a rather normal test. Will RUTX manage to hold a new high
this time versus selling off?

Shocking. Alarming. NASDAQ did not rise for a session. The rally must be
over.

That is a bit of an exaggeration, but that is the way it appeared judging
from commentary on the financial stations. I suppose that mindset is bound
to evolve given the constant intervention taken to ensure any market selloff
is turned back to the upside. Most recently this occurred 2 weeks back,
prompting NASDAQ and SOX to turn -- on a dime -- and rally back to new
highs, at least for NASDAQ. NASDAQ gapped lower and SOX reversed violently
on the same session, closing at new selloff lows. The next session they
both gapped upside and rallied. A relief rally followed, and on the sixth
day Yellen gave her dovish congressional testimony. The rally surged upside
in part 2. Friday investors stepped back and the indices lost a bit of
ground. Hey, what is going on here?

Well, even manipulated markets cannot rise every session. As in 'The
Matrix' where humans would reject the programming if all was too serene and
idyllic, if stocks rallied every day, even the slowest in the land, that is,
Congress, would catch on and the intervention would lose effect. So, there
will be allowed declines as on Friday. The controlling powers will allow
normal market pullbacks, but if it continues too long and threatens a real
break, such as 2 weeks ago, actions must be taken.

So, as we noted might happened, though we wanted more upside first, the
stock indices started testing the breaks to new highs. Barely. The losses
in many cases required sensitive instruments to measure them.

VOLUME: NYSE +12%, NASDAQ -3%. NYSE trade finally moved higher Thursday
and Friday, though still below average. As SP500 and the NYSE indices went
nowhere or lost ground, that suggests some churn/higher volume turnover
after a good move. Nothing major yet, but higher volume to the downside is
never great. NASDAQ trade remained low and below average as it tested; no
selling what they just bought.

A/D: NYSE -1.1:1, NASDAQ -1.5:1. NASDAQ 100 was up on the session,
indicating the negative breadth was thanks to the non-large cap four letter
stocks.

This is hardly the stuff of an imminent selloff. Now IF the stock indices
reversed downside sharply as they have done on other occasions, giving up
the breakout with downside engulfing patterns, THAT would be a cause for
concern. Oh, but there is the Fed and the Plunge Protection Team, ready to
assist whenever some selling lasts to the point where those playing the
upside may get discouraged and not put all of their money into stocks (as if
there was another choice, right?).

NEWS/ECONOMY

The week was pretty slow given most of the news is the same old stories that
are kept alive with new leaks, theories, accusations. The Trump/Russia
fishing expedition continues and Trump continues insisting on keeping it
going with continued unforced errors. For instance? He says he would never
have hired Sessions if he knew Sessions would recuse himself -- without
asking. Granted I would be a bit miffed if my AG did that without
consultation, but I just don't have the bravado to Tweet about it. Trump
does things the way he has always done things, and it is quite humorous to
watch DC squirm. It is like the Beverly Hillbillies coming to upper
society, but the irony is Trump is one of upper society.

There are stories to worry about. As seen Thursday, the economic data
continues to erode as Philly Fed saw new orders (25.9 to 2.1), production,
and other metrics not just fall, but downright collapse. Economic data
continues eroding, and there is your justification for Yellen's
congressional cold feet.

There are also not just economic stories.

The FTC is probing AMZN for deceptive discounting. Democrats are vociferous
in wanting the FTC to pursue AMZN on the WFM deal. Sounds as if the
'getting too big' standard for corporations is flashing at Congress'
socialists. That is not to be confused with the 'too big to fail' standard
applied to banks. Banks can be propped up and subsidized as much as needed
to maintain their dominance, but corporations cannot be allowed to get too
large. After all, most members of Congress go to work for a big financial
institution or a firm in bed with the financial institutions after they
leave office. Cannot have the source of multi-million dollar salaries and
bonuses taken away; it is an entitlement for serving, right?

The problem: when government starts trying to limit companies for their
success, tremors run through the economy. It happened when the Clinton
administration decided to go after MSFT. No one knew it at the time, but
that move coincided with the NASDAQ's top. Now we have a long rally and
AMZN rightly is credited with a big role in that move. New highs, much rah,
rah spirit, then the regulators feel the need to 'protect' is us all. What
with? Another stock market crash and recession as in 2000 and 2001? Gee,
thanks. Not sure if the Fed and PPT can ultimately avert any negative
ramifications if the FTC is serious.

Money Supply. Of course what keeps the economy and markets moving is money
supply, and our friends at the Fed have the vault keys. While Yellen turned
more dovish with her congressional testimony, money supply is still
contracting, down for 105 months straight to a low of 5.4% growth. Yes it
is still growing, but for perspective that level is below the September 2008
level. It remains to be seen if the Fed loosens back up or not.

North Korea: The US has told all US nationals in North Korea to leave
immediately. That sounds really promising for a quick peace agreement. If
you mean bombing North Korea off the map as a quick means to peace, that is.

THE MARKET

CHARTS

So this is selling? The indices test their breaks higher. Not a lot of
intrigue here.

SOX: The only index NOT to hit a new high last week, so we start here.
Nice rally past the June lower high, peaking Thursday. Friday a gap to a
doji over the 10 day EMA. These stocks need a test, likely put in a modest
test over part of this coming week.

NASDAQ: Later to the new high but solid enough action with volume on
Tuesday's upside, a Wednesday gap past the prior all-time high. Thursday
and Friday basically a standoff. Breakout, new high, a very modest test
thus far.

RUTX: Nice surge to a clear new high Wednesday, a pause Thursday, then RUTX
was on a rampage early Friday. Then it stopped. The bids ended. RUTX
slipped, then fell harder, losing almost a half percent on the session.
Still holding the breakout to the high, however, and not in bad shape. It's
just that every time we see that kind of reversal you worry. It happened in
late February/early March. It happened in April just after a new high. It
happened in early June as it put in a new high. It happens.

SP400: This is a pretty test. Wednesday breakout to a new high, Thursday
and Friday a tap at the 10 day EMA on the low, a decent rebound off the
test. Held the break to a new high, good position.

SP500: New highs continued through Thursday, though Wednesday was the
closing high. Barely giving any back, holding easily over the 10 day EMA in
a barely test.

DJ30: Held steady around the prior week's new high, bouncing back and forth
over the 10 day EMA. Would test lower intraday then rebound to hold the 10
day. Pretty decent test has already taken place, leaving DJ30 in position
to move higher.

LEADERSHIP

Many groups rallied on the week, many tested back some to end the week.
Still plenty of leaders to push the indices higher. Biotech/Drugs,
software, China, chips look good. Even some retail has improved while oil
tries again but also struggles again.

China: Several stocks surged, other leaders tested. BZUN is surging and
continued doing so Friday with an 8% gain. HTHT surged. JD looks good to
make a break higher. SINA, SOHU, NTES, BABA are in decent tests. WUBA
looks ready to go again.

Biotech/Drugs: Some good moves, some tests as well. CELG rallied late week
showing better volume. AMGN was steadily higher up the 10 day EMA though
not spectacular. Others look ready to go, e.g. AXGN, ARNA.

Retail: DDS exploded higher and continued to surge. CONN is setting up in
an early part of a test. JCP actually looks as if it can make a break
higher form a long selloff.

FAANG: FB led early week, hit the top of its channel, paused. AAPL is
testing a break through the 50 day SMA; interesting. AMZN testing the 10
day EMA after hitting a new high Tuesday to Thursday. NFLX continued higher
after gapping on earnings. GOOG just below the June high.

A/D and Hi/Lo: Decliners led 1.11 to 1
Previous Session: Advancers led 1.03 to 1

New Highs: 184 (-31)
New Lows: 15 (+7)

SENTIMENT INDICATORS

VIX: 9.36; -0.22
VXN: 14.36; 0
VXO: 7.77; -1.23

Put/Call Ratio (CBOE): 0.74; 0

Bulls and Bears: Bully. Bulls surge almost 8 points and indeed close to the
highs from earlier in the year. Nothing like new highs. Bulls fell almost
2 points, falling back toward multiyear lows.

Bulls: 57.8 versus 50.0

Bears: 16.7 versus 18.6

Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.

Oil: 45.72, -1.15. Came under pressure Friday as production figures show
Saudi Arabia pumping more than it said.

Gold: 1254.90, +9.40. Gold took on new luster with a move off the break
over the 200 day SMA. Paused midweek, surged sharply Friday, continuing
higher in its range.

MONDAY

Consumer Confidence, New Home Sales, Durable Goods, GDP Q2 advanced, and our
friends at the FOMC with a rate decision Wednesday. A relatively blistering
2.8% is anticipated on GDP -- will the Fed have advance notice of the
advance report? Likely. Will it toughen up the Fed's statement on
Wednesday? It shouldn't, but then again, the Fed may feel the market
misunderstood Chairman Yellen's congressional testimony and desires to
redirect the mindset away from the Fed having turned more dovish to
compensate for economic AND political risk.

That means Wednesday could be a bit more interesting than usual in terms of
a typical FOMC meeting. Outside of that, the indices started a test toward
the weekend, now a very modest test, a very normal one after new highs.
That should continue and set up a new break higher once completed.

The worry, of course, is that after hitting new highs the indices reverse.
As noted in discussing the RUTX chart, that is something it has done quite
regularly. New high, selloff. New high, selloff. Of course RUTX is not
the entire market and NASDAQ and SOX have led most of the move, and they too
are important for the rally's further advance. Both are in very nice, easy,
orderly tests. With the Fed, as far as we know right now, fully behind the
market, why not put in an easy test of the new highs and then resume the
rally?

As a result, we have some nice upside plays for the coming week, stocks that
in some cases have not made a big move yet but have some great bases in
place and look to move higher. Others have rallied, are testing, and still
have plenty of room to rise.

Earnings is here and some of these plays are heading toward results. Even
so, we like the possibilities.

Have a great evening!

SUPPORT AND RESISTANCE

NASDAQ: Closed at 6387.75

Resistance:

Support:
6341.70 is the all-time high from early June.
The 10 day EMA at 6316
6300 is the mid-June interim high
6205 is the late May all-time high
The 50 day EMA at 6191
The 2016 trendline at 6078
5996 is the recent May 2017 low
5937 is the all-time high from April
5915 is the tops of the March to April 2017 range
5910 is the lower gap point from mid-April
5800 from the February consolidation lows
The 200 day SMA at 5756
5661 is the late January upper gap point
5601 is the January lower gap point
The November prior all-time high at 5404
5340 is the September and October 2016 twin peaks
5287.61 is the September 2016 high
5271.36 is the August 2016 intraday prior all-time high
5231.94 is the 2015 all-time high
5170 is the October intraday low.
5162 is the early November peak, 5176 is the December intraday peak
5100 from the April peak and early May peak
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5007 is the 12/31 upper gap point from that big gap lower

S&P 500: Closed at 2472.54

Resistance:

Support:
The 10 day EMA at 2458
2453.46 is the June prior all-time closing high
2439 is the early June all-time closing high
The 50 day EMA at 2427
2406 is the all-time high from May 2017
2401 is the March 2017 all-time high
2352 is the recent May 2017 low
2348 is the April 2017 lower gap point
2329 is the March and April twin lows
2322 is the March 2017 low
2319 is the 78% Fibonacci retracement
The 200 day SMA at 2314
2301 is the late January 2017 high
2298 is the late January 2017 high
2282 - 2280 from January 2017
2277.53 is the December 2016 high
The November 2016 all-time high at 2213.25
2194 is the August 2016 prior all-time high
2175 is the June 2016 high

Dow: Closed at 21,580.07

Resistance:

Support:
21,535 is the all-time high
The 20 day EMA at 21,489
The 50 day EMA at 21,294
21,169 is the March 2017 all-time high
20,553 is the lows of the week of May 15
20,547 is the lower gap point from late April 2017
20,412 is the March 2017 low
20,400 is the mid-April 2017 low.
The 200 day SMA at 20,205
20,126 is the January 2017 intraday high
20,101 is the late January closing high.
19,994 - 19,999 (early January high, upper gap point from late January
19750 is the lows of the December/January range
19,732 is the January 2017 low
18,669 is the August 2016 all-time high
18,595 is the July 2016 peak
18,351 is the prior all-time high from May 2015